On May 22, the U.S. Treasury auctioned $16 billion of 20-year bonds at 1 AM today. Due to a lack of bidders, the yield on the 20-year U.S. Treasuries peaked at 5.104%, the highest level since November 2023, with a final reported value of 5.047%. This was the first auction of long-term Treasury bonds since last Friday when Moody's became the third and final major rating agency to downgrade the U.S. from its top AAA credit rating. Brian Quigley, senior portfolio manager at Vanguard, previously stated that he believes this auction will serve as an important barometer for market demand for long-term U.S. Treasuries. Tom di Galoma, managing director at Mischler Financial Group, noted that if yields break above 5%, strong demand from life insurance companies and state and local pension funds is expected for 20-year and 30-year Treasuries. The rise in U.S. Treasury yields led to a 1% drop in the S&P 500 index, a 0.6% decline in the Nasdaq, and a 1.6% fall in the Dow, while Bitcoin briefly retraced about 3.3%.

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